The most cautious answer to your question is no – marijuana remains an illegal controlled substance under federal law. While federal legislation has been proposed that would grant a safe harbor for banks providing services to certain marijuana-related businesses (MRBs) that operate legally under state law, no such protections currently exist. Having said that, as of this writing there are more than four hundred financial institutions across the country (mostly credit unions) that are taking deposits from MRBs; they are doing so at their own risk, with stepped-up compliance programs.

Although Illinois law creates a limited exception to Illinois’ criminal laws for growing, dispensing and using medical cannabis for certain patients, the federal Controlled Substances Act makes it illegal under federal law to manufacture, distribute, or dispense marijuana. Moreover, anyone who “aids, abets, counsels, commands, induces or procures its commission” is punishable as a principal for the crime. The fact that federal entities such as FinCEN and the Department of Justice have published guidance on maintaining relationships with MRBs does not change federal law, which continues to treat marijuana as an illegal controlled substance.

The FinCEN Guidance outlines a bank’s obligations with respect to providing financial services directly to MRBs, including a requirement to file one of three types of marijuana-specific SARs for those customers’ transactions: (1) marijuana limited SARs, (2) marijuana priority SARs, and (3) marijuana termination SARs. FinCEN’s guidance explains when to file each of these marijuana-specific SARs based on how a transaction aligns with the law enforcement priorities of the U.S. Department of Justice, as outlined in a guidance known as the “Cole Memorandum,” which generally provided that state and local law enforcement and regulatory bodies should remain the primary means of addressing marijuana-related activity.

We note that in January of 2018, former U.S. Attorney General Sessions rescinded the Cole Memorandum, which formed the basis of the FinCEN Guidance. However, the FinCEN Guidance remains in effect at this time, and current U.S. Attorney General Barr indicated during his confirmation proceedings that he does “not intend to go after parties who have complied with state law in reliance on the Cole Memorandum.”

Consequently, some banks doing business in states that have legalized marijuana for medical and/or adult recreational use (such as Illinois) may decide to take a calculated risk to accept deposits or provide other services to MRBs that are operating legally under state law. These banks undertake heavy monitoring and BSA/AML responsibilities when banking such customers, with a clear understanding of the risks involved relative to the inconsistent federal law.

For resources related to our guidance, please see:

• H.R.1595 – SAFE Banking of 2019, 116th Congress (“A Federal banking regulator may not . . . prohibit, penalize, or otherwise discourage a depository institution from providing financial services to a cannabis-related legitimate business or service provider or to a State, political subdivision of a State, or Indian Tribe that exercises jurisdiction over cannabis-related legitimate businesses; . . .”)

• S.1028 – Strengthening the Tenth Amendment Through Entrusting States (STATES) Act, 116th Congress (“Part G of the Controlled Substances Act (21 U.S.C. 801 et seq.) is amended by adding at the end the following: . . . Notwithstanding any other provision of law, the provisions of this title as applied to marihuana, other than the provisions described in subsection (c) and other than as provided in subsection (d), shall not apply to any person acting in compliance with State law relating to the manufacture, production, possession, distribution, dispensation, administration, or delivery of marihuana.”)

• Compassionate Use of Medical Cannabis Pilot Program Act, 410 ILCS 130/1 (Illinois law that permits the medical use of marijuana for certain patients.)

• Controlled Substances Act, 21 USC 841(a)(1) (“Unlawful acts. Except as authorized by this subchapter, it shall be unlawful for any person knowingly or intentionally — (1) to manufacture, distribute, or dispense, or possess with intent to manufacture, distribute, or dispense, a controlled substance; . . . .”); 21 USC 802(6) (A controlled substance is “a drug or other substance, or immediate precursor, included in schedule I, II, . . .”); 21 USC 812(c)(c)(10) (Schedule I drugs include marijuana.); 18 USC 2(a) (“Whoever commits an offense against the United States or aids, abets, counsels, commands, induces or procures its commission, is punishable as a principal.”)

• Department of Justice, Memorandum Regarding Marijuana Enforcement (August 29, 2013) (“As the Department noted in its previous guidance, Congress has determined that marijuana is a dangerous drug and that the illegal distribution and sale of marijuana is a serious crime that provides a significant source of revenue to large-scale criminal enterprises, gangs, and cartels. The Department of Justice is committed to enforcement of the [Controlled Substances Act] consistent with those determinations. The Department is also committed to using its limited investigative and prosecutorial resources to address the most significant threats in the most effective, consistent, and rational way. In furtherance of those objectives, as several states enacted laws relating to the use of marijuana for medical purposes, the Department in recent years has focused its efforts on certain enforcement priorities that are particularly important to the federal government: . . .”)

• Department of Justice, Memorandum Regarding Marijuana Enforcement (August 29, 2013) (“In jurisdictions that have enacted laws legalizing marijuana in some form and that have also implemented strong and effective regulatory and enforcement systems to control the cultivation, distribution, sale, and possession of marijuana, conduct in compliance with those laws and regulations is less likely to threaten the federal priorities set forth above. . . . In those circumstances, consistent with the traditional allocation of federal-state efforts in this area, enforcement of state law by state and local law enforcement and regulatory bodies should remain the primary means of addressing marijuana-related activity.”)

• FinCEN Guidance, FIN-2014-G001 BSA Expectations Regarding Marijuana-Related Businesses (February 14, 2014) (“This FinCEN guidance clarifies how financial institutions can provide services to marijuana-related businesses consistent with their BSA obligations, and aligns the information provided by financial institutions in BSA reports with federal and state law enforcement priorities.”)

• FinCEN Guidance, FIN-2014-G001 BSA Expectations Regarding Marijuana-Related Businesses (February 14, 2014) (“Because federal law prohibits the distribution and sale of marijuana, financial transactions involving a marijuana-related business would generally involve funds derived from illegal activity. Therefore, a financial institution is required to file a SAR on activity involving a marijuana-related business (including those duly licensed under state law), in accordance with this guidance and FinCEN’s suspicious activity reporting requirements and related thresholds.”)

• FinCEN Guidance, FIN-2014-G001 BSA Expectations Regarding Marijuana-Related Businesses (February 14, 2014) (Outlining three marijuana-specific SARs for marijuana-related business customers and when to file them)

• Sessions Memorandum — Rescinding Previous Nationwide Guidance Specific to Marijuana Enforcement (January 4, 2018) (“Given the Department’s well-established general principles, previous nationwide guidance specific to marijuana enforcement is unnecessary and is rescinded, effective immediately.”)

• Forbes, “Trump Attorney General Pick Puts Marijuana Enforcement Pledge In Writing” (January 28, 2019) (“William Barr, President Trump's nominee to serve as the next U.S. attorney general, made headlines earlier this month when he pledged during his Senate confirmation hearing not to ‘go after’ marijuana companies that comply with state laws. Now, in response to written questions from senators, Barr is putting that pledge on paper, in black and white. . . . ‘As discussed at my hearing, I do not intend to go after parties who have complied with state law in reliance on the Cole Memorandum,’ he wrote, referring to Obama-era cannabis enforcement guidance that then-Attorney General Jeff Sessions rescinded last year. That said, Barr isn't committing to formally replacing the Cole Memo, which generally directed federal prosecutors not to interfere with state marijuana laws, with new guidance reiterating the approach.”)